Oil prices rose as much as 1 percent yesterday as tensions continued in the Middle East.
During yesterday’s trading, Brent crude futures rose 86 cents, or 1.1 percent, to $80.25 per barrel. US West Texas Intermediate crude futures also rose 81 cents, or 1.1 percent, to $74.70 per barrel. Both benchmarks rose more than 4 percent for the second week in a row.
Leon Li, an analyst at CMC Markets in Shanghai, said, “Oil prices may witness a recovery due to geopolitical conflicts and the imminent implementation of OPEC+ production cuts.”
Saudi Arabia, Russia and other members of OPEC +, which pump more than 40 percent of global oil, agreed to voluntary production cuts amounting to a total of about 2.2 million barrels per day in the first quarter of 2024.
He added, “Therefore, a small supply gap is likely to occur in January next year, and the price of West Texas Intermediate crude may rise to between $75 and $80 per barrel.”
More shipping companies are avoiding the Red Sea due to attacks on ships, causing disruptions to global trade through the Suez Canal, through which about 12 percent of global trade traffic passes.
German companies Hapag-Lloyd and Hong Kong-based Orient Overseas Container Line said they would avoid the Red Sea by rerouting ships or suspending sailings, becoming the latest two companies to announce this.
Analysts say, “The impact of this on oil supplies has been limited so far, as the bulk of Middle East crude is exported through the Strait of Hormuz.”